It stands for to Hit AC 0
Example
A level 1 Fighter would have a Thac0 of 20

To hit a creature with the AC of 10 he would have to roll a 10 or better.

A level 10 fighter would have a Thac0 of 10
to hit an AC 10 creature he would have to roll a 0 or better but in reality a 2 or better since 1s where always misses.
For an AC of -10 the level 10 fighter would have to roll a 20 or better.

The AC scale went from 10 to -10 with 10 being the worse and -10 being the best. I do believe in some expanded rule there where things that violated these rules such as some dragons with ACs of -12 but the core rules it was 10 to -10.